Clearwire rose 1.9 percent to $3.26 at the close in New
York, bringing the year-to-date gain to 13 percent. That puts
the stock 9.8 percent above Sprint’s buyout offer, which is
slated to go before investors at a meeting in the morning.

Sprint, which already owns slightly more than 50 percent of
Clearwire, is attempting to buy the remainder of the shares for
$2.2 billion. Since Clearwire and Sprint agreed to the deal in
December, Dish Network Corp. (DISH) has stepped forward with a $3.30-a-share offer -- though that bid is hindered by Sprint’s majority
ownership. So far, Sprint has made no indications it will raise
its price, and Clearwire’s board continues to recommend
investors endorse the original offer.

Shareholders may require more convincing, said Christopher King, an analyst at Stifel Nicolaus & Co.

“The higher stock price means the majority of investors
expect the vote to be no, and that another bid will come forward
either from Dish or somewhere else,” said King, a Baltimore-based analyst who has a hold rating on Clearwire.

Sprint is unlikely to get the votes it needs, Walter Piecyk, an analyst at BTIG LLC in New York, said in a report
last week. That may force Sprint to postpone or adjourn the
proceedings, he said.

Joint Venture

Sprint, the third-largest U.S. wireless carrier, needs the
majority of Clearwire’s Class A shareholders to vote yes in
order to gain control of the remaining 49 percent of Clearwire
it doesn’t own. The move would wind down a five-year-old joint
venture with Clearwire that tried to build a nationwide wireless
Internet network.

Clearwire, based in Bellevue, Washington, has said it faces
a cash crunch and needs at least $1.7 billion to keep operating.
Shareholder-advisory groups Institutional Shareholder Services
Inc. and Egan-Jones Ratings Co. have both endorsed Sprint’s bid,
citing Clearwire’s dim prospects as an independent company.

Undervalued Assets?

Glass, Lewis & Co., another proxy-advisory firm, disagreed,
saying Sprint hasn’t made a compelling case that its offer is
the best option. Clearwire investors such as Crest Financial
Ltd. have argued that the company’s assets are being
undervalued. Crest even offered to lend the company money itself
to help keep it afloat.

Sprint made its bid for Clearwire after agreeing to a deal
with SoftBank Corp. (9984) in October. In that transaction, Tokyo-based
SoftBank would acquire 70 percent of Sprint for $20.1 billion.
The takeover would help SoftBank expand into the U.S. and give
Sprint an $8 billion cash infusion.

Dish, a satellite-TV provider controlled by billionaire
Charlie Ergen, is making a separate attempt to thwart the
SoftBank acquisition. He bid $25.5 billion for Sprint last
month, part of a strategy to expand into the mobile-phone
business.

In a letter today, Crest urged Clearwire shareholders to
wait until June to decide on Sprint’s bid, providing more time
for Sprint’s own ownership status to be resolved.

‘Crown Jewel’

“Clearwire is the crown jewel, and Sprint is only the
intermediary,” Crest General Counsel David Schumacher wrote in
the letter. “There is no reason to let Sprint lock up Clearwire
before Sprint’s ownership is settled.”

Dish’s $3.30-a-share counteroffer for Clearwire came in
January. While the bid tops Sprint’s price, it’s more complex
and may require Sprint’s consent to be completed. Clearwire
further hindered the Dish offer when it began accepting
financing from Sprint in March. The funding took the form of
exchangeable notes, which Sprint can convert into Clearwire
stock at $1.50 each under certain conditions. That means
Sprint’s hold over Clearwire will grow.

Mount Kellett Capital Management LP, another Clearwire
investor, said earlier this month that it forged an alliance
with other shareholders to coax Sprint into making a better
offer. The group, which also includes Highside Capital
Management LP, Glenview Capital Management LLC and Chesapeake
Partners Management Co., has 18.2 percent of Clearwire’s
publicly traded shares, according to a filing at the time. The
group didn’t include Crest Financial, which has lobbied to keep
Clearwire independent.

No Votes

“At this point, it looks like the no votes have it,”
Kevin Roe, founder of Roe Equity Research LLC in Dorset,
Vermont, said last week.

Sprint could probably talk to a block of shareholders that
oppose the transaction and work out a new arrangement, Roe said.

“My expectation is that Sprint will come to an agreement
with the shareholders that oppose the deal, either before the
vote or even after a no vote,” he said.

If Sprint thinks it will lose the vote, it will probably
seek to delay tomorrow’s meeting, King said.

“They could push it back, either to work on a different
offering price or try to convince more shareholders,” he said.